Latest update December 18th, 2024 3:21 AM
CGX invokes ‘force majeure’ clause in Corentyne licence after pushing back drill date for second well
Kaieteur News – CGX Energy Inc. and Frontera Energy Corporation, the joint venture partners in the Petroleum Prospecting License for the Corentyne oil block offshore Guyana has invoked the ‘force majeure’ clause within its operating document following their inability to drill Wei-1, its second well, by November 27, 2022 due to circumstances beyond the company’s control.
‘Force majeure’ is a common clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance occurs beyond the control of the parties such as a war, strike, riot, crime, epidemic or sudden legal changes prevents one or both parties from fulfilling their obligations under the contract.
In a public notice Thursday, the Joint Venture said that the Guyana Government has confirmed that the Corentyne License remains in Full Force, Effect and Good Standing while informing that it has also completed their Joint Operating Agreement Amendment.
The company in a Press Release announced on November 28, 2022 that due to circumstances beyond the reasonable control of the Joint Venture, they would be unable to meet the deadline which expired earlier this week. They said that this was due to ongoing exploration activities by a third-party operator that have delayed the release of the NobleCorp Discoverer drilling unit contracted by CGX.
“The Government of Guyana has agreed with the Joint Venture’s declaration of force majeure regarding Phase Two of the Second Renewal Period of the Corentyne Block Petroleum Agreement (“Petroleum Agreement”) and a corresponding extension of the License to January 31, 2023,” the Press Release said.
It continued: “The Joint Venture remains committed to executing its drilling activities in the Corentyne block and the declaration of force majeure is a procedural step which preserves the Joint Venture’s interests in the License.”
It said that the Government of Guyana has confirmed that the Petroleum Agreement for the Corentyne block and License will remain in full force and effect and good standing.
CGX’s said that as part of its preparations, the Joint Venture agreed with the Government of Guyana that the Wei-1 well will be spudded no later than January 31, 2023, utilising NobleCorp’s (formerly Maersk). CGX said that its timeline is in keeping with the schedule provided by NobelCorp so as to allow the NobleCorp Discoverer semi-submersible mobile drilling unit to complete its current obligations in Trinidad.
According to Thursday’s announcement the Joint Venture completed the previously announced agreement to amend the Joint Operating Agreement (JOA) originally signed between CGX and a subsidiary of Frontera on January 30, 2019, as amended (JOA Amendment).
“All conditions precedent to the JOA Amendment have been satisfied. As a result of the JOA Amendment, CGX has a 32.00% participating interest and Frontera has a 68.00% participating interest in the Corentyne block, pending the filing of customary documentation with the Government of Guyana,” the release informed.
Professor Suresh Narine, Executive Co-Chairman of CGX’s Board of Directors said that, “The Joint Venture is well prepared and excited to begin Wei-1 well drilling operations, scheduled to spud in January 2023. All pre-drill activities are complete, and all necessary services, materials and support vessels are contracted.”
He added that, “Declaring force majeure is a necessary step in preserving the Joint Venture’s interests in the Corentyne license. We are grateful for the ongoing support and understanding we have received from the Government of Guyana as we mutually work to unlock the potentially transformational opportunity before us in the Corentyne block.”
Professor Narine said that with the JOA Amendment now concluded, additional funding for the drilling of Wei-1 is secured and CGX has a clean balance sheet with no loans and encumbrances. “We now look forward to the drilling of Wei-1 and the potential extension of the Kawa-1 discovery in the northern section of the Corentyne block.”
The Wei-1 well will be located approximately 14 kilometres northwest of the Kawa-1 exploration well in the Corentyne block, approximately 200 kilometres offshore from Georgetown, Guyana and will be drilled in water depth of approximately 1,912 feet (583 metres) to an anticipated total depth of 20,500 feet (6,248 metres). The Wei-1 well will target Maastrichtian, Campanian and Santonian aged stacked channels in a western channel complex in the northern section of the Corentyne block, CGX said. The Wei-1 well follows the discovery of light oil and condensate found at the Kawa-1 well earlier this year.
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